Loblaw Companies Limited Reports a 14.9% Increase in Adjusted EPS(2) and a 139.8% Increase in Basic EPS for the Second Quarter of 2015

BRAMPTON, ON, July 23, 2015 /CNW/ - Loblaw Companies Limited (TSX: L)
("Loblaw" or the "Company") today announced its unaudited financial
results for the second quarter ended June 20, 2015. The Company's
second quarter report will be available in the Investor Centre section
of the Company's website at loblaw.ca and will be filed with SEDAR and
available at sedar.com.

"I am pleased with our overall performance in the second quarter, as we
continued to execute well against our strategic framework," reported
Galen G. Weston, President and Executive Chairman of Loblaw Companies
Limited. "Looking ahead, the grocery industry remains highly
competitive and healthcare reform continues to put pressure on our
pharmacy business. We are well positioned to achieve earnings growth
through a stable trading platform, incremental efficiencies, synergies
and a stronger balance sheet."

2015 SECOND QUARTER HIGHLIGHTS(1)

Consolidated sales were $10,535 million, an increase of 2.2% compared to
the second quarter of 2014.

Retail segment sales were $10,318 million, an increase of 2.2% compared
to the second quarter of 2014.

Food retail (Loblaw) same-store sales growth for the quarter was 4.2%,
after excluding gas bar (1.2%) and the negative impact of a change in
distribution model by a tobacco supplier (0.9%). Including these
impacts, food retail same-store sales growth was 2.1% (2014 - 1.8%).

Retail segment gross profit was $2,711 million and adjusted gross profit(2) was $2,719 million. Adjusted gross profit percentage(2) was 26.4% compared to 26.3% in the second quarter of 2014.

The Company incurred restructuring and other related charges of $45
million in the second quarter of 2015 as part of a restructuring plan
that includes the closure of approximately 52 unprofitable retail
locations over the next 12 months. The Company expects approximately
$70 million to be recognized in the third quarter of 2015. On an
annualized basis, the closures will decrease sales by approximately
$300 million but will result in a favourable impact to operating income
of approximately $35 million to $40 million.

During the second quarter of 2015, the Company realized approximately
$53 million of net synergies.

During the second quarter of 2015, the Company continued to deliver
efficiencies in food retail.

During the second quarter of 2015, adjusted debt(2) decreased by $323 million and cumulatively since the closing of the
acquisition of Shoppers Drug Mart by $1,345 million, leaving only $355
million of further reduction to achieve the Company's target. The
Company's adjusted debt(2) to rolling year adjusted EBITDA(2) was 2.7x as at June 20, 2015 compared to 4.5x as at June 14, 2014.

See "News Release Endnotes" at the back of this News Release.

CONSOLIDATED RESULTS OF OPERATIONS

For the periods ended June 20, 2015 and June 14, 2014

2015

2014(3)

2015

2014(3)

(millions of Canadian dollars except where otherwise indicated)

(12 weeks)

(12 weeks)

$ Change

% Change

(24 weeks)

(24 weeks)

$ Change

% Change

Revenue

$

10,535

$

10,307

$

228

2.2%

$

20,583

$

17,599

$

2,984

17.0%

EBITDA(2)

$

782

$

(72)

$

854

1,186.1%

$

1,566

$

399

$

1,167

292.5%

Adjusted EBITDA(2)

857

794

63

7.9%

1,646

1,276

370

29.0%

Adjusted EBITDA margin(2)

8.1%

7.7%

8.0%

7.3 %

Operating income (loss)

$

413

$

(456)

$

869

190.6%

$

827

$

(180)

$

1,007

559.4%

Adjusted operating income(2)

612

535

77

14.4%

1,155

822

333

40.5%

Adjusted operating margin(2)

5.8%

5.2%

5.6%

4.7 %

Net earnings (loss) attributable to shareholders of the Company

$

185

$

(456)

$

641

140.6%

$

331

$

(336)

$

667

198.5%

Adjusted net earnings attributable to shareholders of the Company(2)

350

297

53

17.8%

651

450

201

44.7%

Basic net earnings (loss) per common share ($)

$

0.45

$

(1.13)

$

1.58

139.8%

$

0.80

$

(0.98)

1.78

181.6%

Adjusted basic net earnings per common share(2) ($)

$

0.85

$

0.74

$

0.11

14.9%

$

1.58

$

1.32

0.26

19.7%

Adjusted basic net earnings per common share(2) were $0.85 in the second quarter of 2015 compared to $0.74 in the
second quarter of 2014. The $0.11 increase was primarily due to an
improvement in the operating performance of the Retail segment.

Basic net earnings per common share for the second quarter of 2015 were
$0.45 compared to basic net loss per common share of $1.13 in the
second quarter of 2014 and were impacted by the following significant
items:

a favourable year-over-year impact of a charge of $622 million ($1.14
per common share) incurred in the second quarter of 2014 related to the
fair value increment on the acquired inventory sold associated with the
acquisition of Shoppers Drug Mart Corporation ("Shoppers Drug Mart");
and

a favourable year-over-year impact of a $190 million ($0.35 per common
share) charge associated with an inventory measurement and other
conversion differences related to implementation of a perpetual
inventory system in the second quarter of 2014.

For a complete list of items that impacted basic net earnings per common
share, but that are excluded from adjusted basic net earnings per
common share(2), see the "Non-GAAP Financial Measures" section of this News Release.

REPORTABLE OPERATING SEGMENTS

Retail Segment

For the periods ended June 20, 2015 and June 14, 2014

2015

2014(3)

2015

2014(3)

(millions of Canadian dollars except where otherwise indicated)

(12 weeks)

(12 weeks)

$ Change

% Change

(24 weeks)

(24 weeks)

$ Change

% Change

Sales

$

10,318

$

10,097

$

221

2.2%

$

20,148

$

17,192

$

2,956

17.2%

Gross profit

2,711

1,840

871

47.3%

5,335

3,443

1,892

55.0%

Adjusted gross profit(2)

2,719

2,652

67

2.5%

5,343

4,255

1,088

25.6%

EBITDA(2)

739

(117)

856

731.6%

1,473

313

1,160

370.6%

Adjusted EBITDA(2)

814

749

65

8.7%

1,553

1,189

364

30.6%

Operating income (loss)

375

(496)

871

175.6%

745

(256)

1,001

391.0%

Adjusted operating income(2)

574

495

79

16.0%

1,073

745

328

44.0%

2015

2014(3)

2015

2014(3)

For the periods ended June 20, 2015 and June 14, 2014

(12 weeks)

(12 weeks)

(24 weeks)

(24 weeks)

Total Retail segment same-store sales growth

2.5%

1.8%

2.4%

N/A

Food retail same-store sales growth

2.1%

1.8%

2.0%

1.3%

Drug retail same-store sales growth

3.8%

2.5%

3.4%

1.9%

Adjusted gross profit %(2)

26.4%

26.3%

26.5%

24.7%

Adjusted EBITDA margin(2)

7.9%

7.4%

7.7%

6.9%

Adjusted operating margin(2)

5.6%

4.9%

5.3%

4.3%

Sales Retail segment sales were $10,318 millionin the second quarter of 2015, an increase of $221 million compared to
the second quarter of 2014. Food retail sales of $7,629 million were
higher by $141 million, or 1.9%, compared to the second quarter of
2014. Drug retail sales of $2,689 million were higher by $80 million,
or 3.1%. The increase in Retail segment sales was primarily due to the
following factors:

Food retail (Loblaw) same-store sales growth for the quarter was 4.2%,
after excluding gas bar (1.2%) and the negative impact of a change in
distribution model by a tobacco supplier (0.9%). Including these
impacts, food retail same-store sales growth was 2.1% (2014 - 1.8%).

The Company's food retail average quarterly internal food price index
was higher than (2014 - in line with) the average quarterly national
food price inflation of 3.9% (2014 - 2.5%) as measured by The Consumer
Price Index for Food Purchased from Stores ("CPI"). CPI does not
necessarily reflect the effect of inflation on the specific mix of
goods sold in the Company's stores;

the number of prescriptions dispensed increased by 4.3% (2014 - 4.1%).
On a same-store basis, the number of prescriptions dispensed increased
by 5.0% (2014 - 3.8%) and, year-over-year, the average prescription
value decreased by 0.5% (2014 - 1.7%);

generic molecules comprised 64.6% of the prescriptions dispensed in the
second quarter of 2015 compared to 62.8% in the second quarter of 2014;
and

Same-store front store sales growth was 3.7% (2014 - 2.4%).

48 food and drug stores were opened and 29 food and drug stores were
closed in the 12 months ended June 20, 2015, with an additional two
franchise food retail stores and 16 drug stores divested pursuant to a
Consent Agreement with the Competition Bureau related to the
acquisition of Shoppers Drug Mart, resulting in no change to square
footage. Excluding the divestitures, net square footage increased by
0.3 million square feet, or 0.4%.

In 2014, the Company restructured its fee arrangements with the
franchisees of certain franchise banners. The revised arrangements are
expected to result in an annual reduction of food retail segment sales
and gross profit of approximately $150 million, with a corresponding
decrease in selling, general and administrative expenses ("SG&A"). In
the second quarter of 2015, the impact of the restructuring was a $33
million negative impact to food retail sales and gross profit, with an
offsetting $33 million positive impact to SG&A.

Gross Profit Gross profit was $2,711 million in the second quarter of 2015, an
increase of $871 million compared to the second quarter of 2014. The
increase in gross profit was driven by higher sales, as described
above, an increase in adjusted gross profit percentage(2) and the favourable year-over-year impact of charges of $622 million
relating to the recognition of the fair value increment on Shoppers
Drug Mart inventory sold and $190 million related to inventory
measurement and other conversion differences associated with the
implementation of a perpetual inventory system recorded in the second
quarter of 2014, partially offset by a charge related to apparel
inventory in the second quarter of 2015 of $8 million.

Adjusted gross profit(2) of $2,719 million was $67 million higher compared to the second quarter
of 2014, driven by higher sales and an increase in adjusted gross
profit percentage(2) of 10 basis points to 26.4%. The increase in adjusted gross profit
percentage(2) included a 30 basis point negative impact from the restructuring
certain franchise fee arrangements. After excluding this negative
impact, adjusted gross profit percentage(2) was 26.7% compared to 26.3% in the second quarter of 2014. The increase
was primarily driven by the achievement of operational synergies.

EBITDA(2) EBITDA(2) was $739 millionin the second quarter of 2015, an increase of $856 million compared to
the second quarter of 2014. The increase in EBITDA(2) included the favourable year-over-year impact of the items described
above in gross profit. Other significant adjustments during the second
quarter of 2015 included restructuring and other related costs, the
unfavourable fair value adjustment on fuel and foreign currency
contracts and a charge related to apparel inventory.

After excluding these adjustments, adjusted EBITDA(2) of $814 million was $65 million higher compared to the second quarter
of 2014, driven by the increase in adjusted gross profit(2) described above and an increase in SG&A of $2 million. The increase in
SG&A was positively impacted by the restructuring of certain franchise
fee arrangements. Excluding this positive impact, SG&A increased by $35
million over the prior year and the SG&A percentage was unchanged at
18.8%. The increase in SG&A was due to higher store and store support
costs, primarily driven by higher sales volumes and the impact of
franchise consolidation, partially offset by lower charges related to
the transition of certain food retail stores to more cost effective and
efficient operating terms under collective agreements, efficiencies
achieved in food retail supply chain, administration and information
technology ("IT"), and positive changes in the value of the Company's
investments in its franchise business.

Adjusted EBITDA margin(2) was 7.9% compared to 7.4% in the second quarter of 2014.

Operating Income Operating income was $375 millionin the second quarter of 2015, an increase of $871 million compared to
the second quarter of 2014. The increase in operating income included
the favourable year-over-year impact of the items described above in
gross profitand the decrease in amortization of intangible assets acquired with
Shoppers Drug Mart of $1 million.

After excluding these adjustments, adjusted operating income(2) of $574 million was $79 million higher compared to the second quarter
of 2014, driven by the increase in adjusted EBITDA(2) of $65 million and a decrease in Retail segment depreciation and
amortization(2) of $14 million. The decrease in Retail segment depreciation and
amortization was the result of an increase in the estimated useful life
of certain IT systems, as well as lower IT and supply chain
depreciation. The increase in adjusted operating income(2) included an increase in food retail operating income, partially offset
by a decrease in drug retail operating income, in both cases excluding
synergies.

Adjusted operating margin(2) was 5.6% compared to 4.9% in the second quarter of 2014.

The results for the Financial Services segment are for the periods ended
June 30, 2015 and June 30, 2014, consistent with the segment's fiscal
calendar. Adjustments to align Financial Services' results to June 20,
2015 and June 14, 2014 are included in Consolidation and Eliminations.
See the "Non-GAAP Financial Measures" and the "Segment Information"
sections of this News Release.

Revenue Revenue was $199 million in the second quarter of 2015, an increase of
$7 million, or 3.6%, compared to the second quarter of 2014. The
increase was partially driven by higher interchange income from higher
loyalty points redemptions and credit card transaction volumes,
partially offset by a reduction in interchange rates by MasterCard®
International Incorporated in the second quarter of 2015. The increase
was also driven by higher interest income from increased credit card
receivable balances and an increase in PC Telecom revenue from higher
Mobile Shop sales.

Operating Income and Earnings Before Income Taxes Operating income was $36 millionin the second quarter of 2015 and earnings before income taxes were $22
million, a decrease of $2 million and $4 million, respectively,
compared to the second quarter of 2014. The decrease in operating
income was primarily driven by higher costs associated with the
Financial Services loyalty program, higher customer acquisition
expenses, partially offset by the interchange income described above
and a lower required allowance for credit card receivables. The
decrease in earnings before income taxes was primarily driven by lower
operating income and higher interest expenses resulting from growth in
the credit card receivables portfolio.

Credit Card Receivables As at June 20, 2015, credit card receivables were $2,647 million, an
increase of $86 million compared to June 14, 2014. This increase was
primarily driven by a growth in the active customer base from continued
investments in customer acquisitions and marketing initiatives,
partially offset by higher customer payment rates. As at June 20, 2015,
the allowance for credit card receivables was $48 million, flat
compared to June 14, 2014.

Choice Properties Segment(4)

For the periods ended June 20, 2015 and June 14, 2014

2015

2014

2015

2014

(millions of Canadian dollars except where otherwise indicated)

(12 weeks)

(12 weeks)

$ Change

% Change

(24 weeks)

(24 weeks)

$ Change

% Change

Revenue

$

183

$

170

$

13

7.6%

$

365

$

337

$

28

8.3%

Operating income

115

122

(7)

(5.7)%

242

240

2

0.8%

Net interest expense and other financing charges

(75)

124

(199)

(160.5)%

264

250

14

5.6%

Adjusted funds from operations(2)

77

69

8

11.6%

152

138

14

10.1%

The results for the Choice Properties Real Estate Investment Trust
("Choice Properties") segment are for the periods ended June 30, 2015
and June 30, 2014, consistent with the segment's fiscal calendar.
Adjustments to align Choice Properties' results to June 20, 2015 and
June 14, 2014 are included in Consolidation and Eliminations. See the
"Non-GAAP Financial Measures" and the "Segment Information" sections of
this News Release.

Revenue Revenue was $183 million in the second quarter of 2015, an increase of
$13 million, or 7.6%, compared to the second quarter of 2014, and
included $165 million (2014 - $152 million) generated from tenants
within the Retail segment. The increase was primarily driven by revenue
from properties acquired subsequent to the second quarter of 2014, as
well as an increase in the base rent of existing properties.

Operating Income Operating income was $115 million in the second quarter of 2015, a
decrease of $7 million compared to the second quarter of 2014. The
decrease in operating income was primarily driven by an unfavourable
fair value adjustment on investment properties and higher recoverable
property taxes and operating costs, partially offset by the higher
revenue as described above.

Net Interest Expense and Other Financing Charges Net interest income and other financing charges were $75 million in the
second quarter of 2015, compared to net interest expense and other
financing charges of $124 million in the second quarter of 2014. The
year-over-year decrease of $199 million in net interest expense and
other financing charges was primarily driven by a favourable fair value
adjustment on Class B Limited Partnership units and a non-cash finance
charge incurred in 2014 related to the early repayment of the
transferor notes, partially offset by higher interest expense due to
the issuance of $250 million of senior unsecured debentures in the
first quarter of 2015.

Adjusted Funds from Operations(2) Adjusted funds from operations(2) were $77 millionin the second quarter of 2015, an increase of $8 million compared to the
second quarter of 2014, primarily driven by higher net property income.

In the second quarter of 2015, Choice Properties acquired 38 investment
properties from the Company for a purchase price of approximately $203
million, excluding acquisition costs, settled through the issuance of
9,237,166 Class B Limited Partnership units and $102 million in cash.

As at June 20, 2015, the Company's effective ownership interest in
Choice Properties was 83.1%.

RESTRUCTURING AND OTHER RELATED COSTS
Subsequent to the end of the second quarter of 2015, the Company
finalized a restructuring plan that will result in the closure of
approximately 52 unprofitable retail locations across a range of
banners and formats. The Company expects that the closures will take
place over the next 12 months. On an annualized basis, the closures
will decrease sales by approximately $300 million but will result in a
favourable impact to operating income of approximately $35 million to
$40 million.

The restructuring and other related costs associated with the
restructuring plan are expected to total approximately $120 million. Of
this amount, a charge of $45 million was recorded in the second quarter
of 2015. This amount included $30 million for severance and lease
termination costs and $15 million for asset impairments associated with
these retail locations. The Company expects approximately $70 million
to be recognized in the third quarter of 2015, with the remainder
expected to be incurred as stores close.

NET INTEREST EXPENSE AND OTHER FINANCING CHARGES
Net interest expense and other financing charges were $106 million in
the second quarter of 2015, a decrease of $44 million compared to the
second quarter of 2014. The decrease included a favourable
year-over-year fair value adjustment related to the Trust Unit
Liability, partially offset by lower accelerated amortization of
deferred financing costs over the same period, as set out in the
"Non-GAAP Financial Measures" section of this News Release.

After excluding these impacts, adjusted net interest expense and other
financing charges(2) of $131 million were $3 million higher compared to the second quarter
of 2014, primarily driven by an increase in Choice Properties debt and
interest expenses resulting from the growth in the credit card
receivables portfolio, partially offset by a reduction in interest
expense due to a repayment of a portion of the Company's unsecured term
loan facility and the maturity of a medium term note ("MTN"), that
matured in the second quarter of 2014.

INCOME TAXES
In the second quarter of 2015, the government of Alberta announced an
increase in the provincial corporate income tax rate from 10% to 12%.
The increase is effective July 1, 2015, but was enacted on June 19,
2015. As a result, the Company recorded a charge of $38 million in the
second quarter of 2015 and year-to-date related to the re-measurement
of its deferred tax liabilities.

Income tax expense for the second quarter of 2015 was $121 million and
the effective tax rate was 39.4%. Income tax recovered for the second
quarter of 2014 was $150 million and the effective tax rate was 24.8%.
The increase in the effective tax rate was primarily attributable to
the increase in deferred tax expense as a result of the increase in the
Alberta statutory corporate income tax rate enacted during the second
quarter of 2015.

The adjusted income tax expense(2) for the second quarter of 2015 was $130 million and the adjusted income
tax rate(2) was 27.0%. Adjusted income tax expense(2) for the second quarter of 2014 was $110 million and the adjusted income
tax rate(2) was 27.0%. The current tax impact of the increase in the Alberta
statutory corporate income tax rate on the adjusted income tax expense(2) was offset by a decrease in certain non-deductible items.

CAPITAL INVESTMENTS
In the second quarter of 2015, the Company invested $221 million in
fixed asset purchases and intangible asset additions, compared to $239
million in the second quarter of 2014.

ADJUSTED DEBT(2)
During the second quarter of 2015, adjusted debt(2) decreased by $323 million, primarily driven by net repayments on
unsecured term loan facilities, partially offset by net borrowings
under Choice Properties' unsecured committed credit facility. Since the
closing of the acquisition of Shoppers Drug Mart, adjusted debt(2) decreased by $1,345 million, leaving only $355 million of further
reduction to achieve the Company's target. The reduction in adjusted
debt(2) since closing included the net repayments on the Company's unsecured
term loan facilities and the repayment of a $350 million MTN, partially
offset by increases in other indebtedness. The Company's adjusted debt(2) to rolling year adjusted EBITDA(2) was 2.7x as at June 20, 2015 compared to 4.5x as at June 14, 2014.

SYNERGIES
Total net synergies achieved during the second quarter were $53 million
(2014 - $8 million), generated primarily from improved cost of goods
sold and from purchasing efficiencies in goods not for resale. Total
net synergies achieved since the closing of the acquisition to the
second quarter of 2015 were $198 million. The Company expects to
achieve annualized synergies of $300 million (net of related costs) in
the third year following the close of the acquisition of Shoppers Drug
Mart.

ISSUANCE OF SECOND PREFERRED SHARES, SERIES B
In the second quarter of 2015, the Company issued 9.0 million 5.30%
non-voting Second Preferred Shares, Series B, with a face value of $225
million for net proceeds of approximately $221 million, which entitle
the holders to a fixed cumulative preferred cash dividend of $1.325 per
share per annum. The Company intends to redeem its $225 million of
capital securities on July 31, 2015, representing all of the
outstanding Second Preferred Shares, Series A. The redemption will be
funded primarily through the proceeds received from the issuance of the
Second Preferred Shares, Series B.

CONSOLIDATION OF FRANCHISES
In 2015, the Company implemented a new franchise agreement ("Franchise
Agreement") for its franchised retail food stores. All new franchises
will be subject to the Franchise Agreement. Existing franchises will be
converted to the Franchise Agreement as the existing agreements expire.
Under the terms of the Franchise Agreement, the Company has determined
it should consolidate the franchises, in accordance with International
Financial Reporting Standards ("IFRS") 10, Consolidated Financial
Statements. As at June 20, 2015, 16 franchisees were consolidated.
There was no significant impact on the Company's operating income or
net earnings in the unaudited interim period condensed consolidated
financial statements as a result of the consolidation of the
franchises.

OUTLOOK(1)

Loblaw's strategic framework is focused on delivering the best in food,
best in health and beauty, operational excellence and growth. This
strategic framework is supported by a financial strategy of maintaining
a stable trading environment that targets positive same-store sales and
stable gross margin; surfacing efficiencies; delivering synergies as a
result of its acquisition of Shoppers Drug Mart; and deleveraging the
balance sheet. Consistent with its previous outlook, on a full year
comparative basis reflecting 2014 financial results for Loblaw and
Shoppers Drug Mart, in 2015 the Company expects to:

Achieve net synergies as a result of the acquisition of Shoppers Drug
Mart slightly exceeding $200 million;

Continue to drive net efficiencies across the food retail business by
achieving reductions in supply chain, administrative functions and IT,
while still investing in key areas, like eCommerce;

Grow adjusted operating income(2) in its food retail business, excluding synergies, and experience a
decline in adjusted operating income(2) in its drug retail business, excluding synergies, as a result of
investments in key projects and other factors;

Grow consolidated adjusted net earnings available to common shareholders(2) (including synergies) relative to 2014, however not at the same level
achieved in the first half of 2015;

Continued pressure in our drug retail business from the ongoing impact
of healthcare reform.

DECLARATION OF DIVIDENDS
The Board of Directors declared a quarterly dividend of [$0.250] per
common share, payable on October 1, 2015 to shareholders of record on
September 15, 2015 and a dividend on the Second Preferred Shares,
Series B of [$0.41] per share payable on [September 30, 2015] to
shareholders of record on [September 15, 2015]. No dividends were
declared on the Second Preferred Shares, Series A.

FORWARD-LOOKING STATEMENTS
This News Release for the Company contains forward-looking statements
about the Company's objectives, plans, goals, aspirations, strategies,
financial condition, results of operations, cash flows, performance,
prospects, opportunities and legal and regulatory matters. Specific
forward-looking statements in this News Release include, but are not
limited to, statements with respect to the Company's anticipated future
results, events and plans, synergies and other benefits associated with
the acquisition of Shoppers Drug Mart, future liquidity and debt
reduction targets, planned capital investments, and status and impact
of IT systems implementation. These specific forward-looking statements
are contained throughout this News Release including, without
limitation, in the "Outlook" section of this News Release.
Forward-looking statements are typically identified by words such as
"expect", "anticipate", "believe", "foresee", "could", "estimate",
"goal", "intend", "plan", "seek", "strive", "will", "may", "on track"
and "should" and similar expressions, as they relate to the Company and
its management.

Forward-looking statements reflect the Company's current estimates,
beliefs and assumptions, which are based on management's perception of
historical trends, current conditions and expected future developments,
as well as other factors it believes are appropriate in the
circumstances. The Company's expectation of operating and financial
performance in 2015 is based on certain assumptions including
assumptions about anticipated cost savings, operating efficiencies and
continued growth from current initiatives. The Company's estimates,
beliefs and assumptions are inherently subject to significant business,
economic, competitive and other uncertainties and contingencies
regarding future events and as such, are subject to change. The Company
can give no assurance that such estimates, beliefs and assumptions will
prove to be correct.

Numerous risks and uncertainties could cause the Company's actual
results to differ materially from those expressed, implied or projected
in the forward-looking statements, including those described in Section
15 "Enterprise Risks and Risk Management" of the Management's
Discussion and Analysis in the 2014 Annual Report - Financial Review
("2014 Annual Report") and the Company's Annual Information Form (for
the year ended January 3, 2015). Such risks and uncertainties include:

failure to realize the anticipated strategic benefits or operational,
competitive and cost synergies following the acquisition of Shoppers
Drug Mart;

failure to reduce indebtedness associated with the acquisition of
Shoppers Drug Mart to bring leverage ratios to a level consistent with
investment grade ratings;

failure to realize benefits from investments in the Company's IT
systems, including the Company's IT systems implementation, or
unanticipated results from these initiatives;

failure to realize anticipated results, including revenue growth,
anticipated cost savings or operating efficiencies from the Company's
major initiatives, including those from restructuring;

the inability of the Company's IT infrastructure to support the
requirements of the Company's business;

changes in the Company's estimate of inventory cost as a result of its
IT system upgrade;

changes to the regulation of generic prescription drug prices and the
reduction of reimbursements under public drug benefit plans and the
elimination or reduction of professional allowances paid by drug
manufacturers;

failure to achieve desired results in labour negotiations, including the
terms of future collective bargaining agreements, which could lead to
work stoppages;

heightened competition, whether from current competitors or new entrants
to the marketplace;

changes in economic conditions, including the rate of inflation or
deflation, changes in interest and currency exchange rates and
derivative and commodity prices;

changes in the Company's income, capital, commodity, property and other
tax and regulatory liabilities, including changes in tax laws,
regulations or future assessments;

the risk that the Company will be unsuccessful in any material
litigation, class action, or regulatory proceeding;

the inability of the Company to manage inventory to minimize the impact
of obsolete or excess inventory and to control shrink;

the risk that the Company would experience a financial loss if its
counterparties fail to meet their obligations in accordance with the
terms and conditions of their contracts with the Company; and

the inability of the Company to collect on and fund its credit card
receivables.

This is not an exhaustive list of the factors that may affect the
Company's forward-looking statements. Other risks and uncertainties not
presently known to the Company or that the Company presently believes
are not material could also cause actual results or events to differ
materially from those expressed in its forward-looking statements.
Additional risks and uncertainties are discussed in the Company's
materials filed with the Canadian securities regulatory authorities
from time to time, including, without limitation, the section entitled
"Risks" in the Company's Annual Information Form (for the year ended
January 3, 2015). Readers are cautioned not to place undue reliance on these
forward-looking statements, which reflect the Company's expectations
only as of the date of this News Release. Except as required by law,
the Company does not undertake to update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise.

Management uses these and other non-GAAP financial measures to exclude
the impact of certain expenses and income that must be recognized under
GAAP when analyzing consolidated and segment underlying operating
performance, as the excluded items are not necessarily reflective of
the Company's underlying operating performance and make comparisons of
underlying financial performance between periods difficult. From time
to time, the Company may exclude additional items if it believes doing
so would result in a more effective analysis of underlying operating
performance. The exclusion of certain items does not imply that they
are non-recurring.

These measures do not have a standardized meaning prescribed by GAAP and
therefore they may not be comparable to similarly titled measures
presented by other publicly traded companies and should not be
construed as an alternative to other financial measures determined in
accordance with GAAP.

Charge related to inventory measurement and other conversion differences

—

190

—

190

Retail segment adjusted gross profit

$

2,719

$

2,652

$

5,343

$

4,255

Charge related to apparel inventory During the second quarter of 2015, the Company entered into an agreement
to liquidate, in the U.S., certain older Canadian apparel inventory and
recorded a charge in the second quarter of 2015 and year-to-date of $8
million (2014 - nil).

Recognition of fair value increment on inventory sold In connection with the acquisition of Shoppers Drug Mart in the second
quarter of 2014, acquired assets and liabilities were recorded on the
Company's condensed consolidated balance sheets at their fair value.
This resulted in a fair value adjustment to Shoppers Drug Mart
inventory on the date of acquisition representing the difference
between inventory cost and its fair value. This difference was
recognized in cost of sales as the inventory was sold, with a resulting
negative impact on gross profit. In the second quarter of 2014 and
year-to-date, $622 million was recognized in gross profit and operating
income.

Charge related to inventory measurement and other conversion differences
for the Company's corporate grocery stores As of the end of 2014, the Company had completed the conversion of
substantially all of its corporate grocery locations and associated
distribution centres to the new IT systems. The implementation of a
perpetual inventory system, combined with visibility to integrated
costing information provided by the new IT systems, enabled the Company
to estimate the cost of inventory using a more precise system-generated
average cost. In the second quarter of 2014 and year-to-date, a $190
million decrease in the value of the inventory was recognized in gross
profit and operating income. The Company is undertaking the conversion
of its remaining grocery locations during 2015 and additional impacts
may result. In 2015, no additional cost has been recognized in gross
profit and operating income.

EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Operating
Income and Adjusted Operating Margin The following tables reconcile earnings (loss) before income taxes, net
interest expense and other financing charges and depreciation and
amortization ("EBITDA"), adjusted EBITDA and adjusted operating income
to operating income (loss), which is reconciled to GAAP net earnings
measures reported in the condensed consolidated statements of earnings
for the periods ended June 20, 2015 and June 14, 2014. The Company
believes that adjusted EBITDA is useful in assessing the performance of
its ongoing operations and its ability to generate cash flows to fund
its cash requirements, including the Company's capital investments
program. The Company also believes that adjusted operating income is
useful in assessing the Company's underlying operating performance and
in making decisions regarding the ongoing operations of the business.

Adjusted EBITDA margin is calculated as adjusted EBITDA divided by
revenue. Adjusted operating margin is calculated as adjusted operating
income divided by revenue.

2015

2014(3)

(12 weeks)

(12 weeks)

(millions of Canadian dollars)

Retail

FinancialServices

Choice Properties(4)

Consolidation and Eliminations

Consolidated

Retail

Financial
Services

Choice
Properties(4)

Consolidation
and
Eliminations

Consolidated

Net earnings (loss) attributable to
shareholders of the Company

$

185

$

(456)

Add (deduct) impact of the following:

Non-Controlling Interests

1

—

Net interest expense and other
financing charges

106

150

Income taxes

121

(150)

Operating income (loss)

$

375

$

36

$

115

$

(113)

$

413

$

(496)

$

38

$

122

$

(120)

$

(456)

Depreciation and amortization

364

2

—

3

369

379

2

—

3

384

EBITDA

$

739

$

38

$

115

$

(110)

$

782

$

(117)

$

40

$

122

$

(117)

$

(72)

Operating income (loss)

$

375

$

36

$

115

$

(113)

$

413

$

(496)

$

38

$

122

$

(120)

$

(456)

Add (deduct) impact of the following:

Amortization of intangible assets
acquired with Shoppers Drug
Mart

124

—

—

—

124

125

—

—

—

125

Restructuring and other related costs

54

—

—

—

54

—

—

—

—

—

Fair value adjustment on fuel and
foreign currency contracts

9

—

—

—

9

—

—

—

—

—

Charge related to apparel inventory

8

—

—

—

8

—

—

—

—

—

Net fixed asset and other related
impairments

4

—

—

—

4

2

—

—

—

2

Recognition of fair value increment
on inventory sold

—

—

—

—

—

622

—

—

—

622

Charge related to inventory
measurement and other
conversion differences

Amortization of intangible assets acquired with Shoppers Drug Mart The acquisition of Shoppers Drug Mart in the second quarter of 2014
included approximately $6,050 million of definite life intangible
assets, which are being amortized over their estimated useful lives.
During the second quarter of 2015, $124 million (2014 - $125 million)
and year-to-date of $248 million (2014 - $125 million) of amortization
was recognized in operating income. Annual amortization associated with
the acquired intangibles will be approximately $550 million over the
next nine years, and will decrease thereafter.

Restructuring and other related costs In the second quarter of 2015, the Company recorded restructuring and
other related charges of $54 million (2014 - nil). Of this amount, $45
million related to a restructuring plan to close 52 unprofitable retail
locations across a range of banners and formats, which included $30
million for severance and lease termination costs and $15 million for
asset impairments associated with these retail locations. The
additional $9 million of restructuring charges related to store support
restructuring activities. The year-to-date charge of $66 million (2014
- nil) also included store support restructuring activities in the Joe
Fresh and Shoppers Home Health Care businesses that were incurred in
the first quarter of 2015.

Net fixed asset and other related impairments At each balance sheet date, the Company assesses and, when required,
records impairments and recoveries of previous impairments related to
the carrying value of its fixed assets, investment properties and
intangible assets. In the second quarter of 2015, the Company recorded
a $4 million (2014 - $2 million) and year-to-date $7 million (2014 - $5
million) related to net fixed asset and other related impairments.

Fair value adjustment on fuel and foreign currency contracts The Company is exposed to commodity price and U.S. dollar exchange rate
fluctuations. In accordance with the Company's commodity risk
management policy, the Company enters into exchange traded futures
contracts and forward contracts to minimize cost volatility relating to
fuel prices and the U.S. dollar exchange rate. These derivatives are
not acquired for trading or speculative purposes. Pursuant to the
Company's derivative instruments accounting policy, changes in the fair
value of these instruments, which include realized and unrealized gains
and losses, are recorded in operating income. In the second quarter of
2015, the Company recorded a net fair value loss on fuel and foreign
currency contracts of $9 million (2014 - nil) and a year-to-date gain
of $3 million (2014 - nil). Despite the impact of accounting for these
commodity and foreign currency derivatives on the Company's reported
results, the derivatives have the economic impact of largely mitigating
the associated risks arising from price and exchange rate fluctuations
in the underlying commodities and U.S. dollar commitments.

Shoppers Drug Mart acquisition-related costs and divestitures loss In the first quarter of 2015, the Company completed all divestitures
required by the Competition Bureau resulting in a divestitures loss of
$2 million. No additional divestitures loss was recorded in the second
quarter of 2015 (2014 - nil). In connection with the agreement to
acquire all of the outstanding common shares of Shoppers Drug Mart, in
the second quarter of 2014, the Company incurred $52 million of
acquisition-related costs and $60 million year-to-date.

Adjusted Net Interest Expense and Other Financing Charges The following table reconciles adjusted net interest expense and other
financing charges to net interest expense and other financing charges
in the condensed consolidated statements of earnings for the periods
ended June 20, 2015 and June 14, 2014. The Company believes that
adjusted net interest expense and other financing charges is useful in
assessing the Company's underlying financial performance and in making
decisions regarding the financial operations of the business.

2015

2014

2015

2014

(millions of Canadian dollars)

(12 weeks)

(12 weeks)

(24 weeks)

(24 weeks)

Net interest expense and other financing charges

$

106

$

150

$

298

$

265

Add (deduct) impact of the following:

Fair value adjustment on Trust Unit Liability

33

(8)

(25)

(20)

Accelerated amortization of deferred financing costs

(8)

(14)

(11)

(14)

Shoppers Drug Mart acquisition-related costs and divestitures loss

—

—

—

(15)

Adjusted net interest expense and other financing charges

$

131

$

128

$

262

$

216

Fair value adjustment on Trust Unit Liability The Company is exposed to market price fluctuations as a result of the
Units held by unitholders other than the Company. These Units are
presented as a liability on the Company's consolidated balance sheets
as they are redeemable for cash at the option of the holder, subject to
certain restrictions. This liability is recorded at fair value at each
reporting date based on the market price of Units at the end of each
period. In the second quarter of 2015, the Company recorded a gain of
$33 million (2014 - loss of $8 million) and year-to-date a loss of $25
million (2014 - $20 million) related to the fair value adjustment on
the Trust Unit Liability.

Accelerated amortization of deferred financing costs In the second quarter of 2015, the Company recorded a charge of $8
million (2014 - $14 million) and year-to-date $11 million (2014 - $14
million) related to the accelerated amortization of deferred financing
costs due to the repayment of $662 million (2014 - $1,600 million) and
year-to-date of $869 million (2014 - $1,600 million) of the Company's
unsecured term loan facility.

Shoppers Drug Mart acquisition-related costs and divestitures loss In addition to the acquisition-related costs and divestitures loss
recorded in operating income noted above, during the first quarter of
2014, $15 million of additional net interest expense was incurred in
connection with the financing related to the acquisition of Shoppers
Drug Mart. As of the acquisition date, these costs are no longer
excluded from adjusted net interest expense and other financing charges
as they are part of ongoing operations.

Adjusted Income Taxes and Adjusted Income Tax Rate The Company believes adjusted income taxes is useful in assessing the
underlying operating performance and in making decisions regarding the
ongoing operations of its business.

2015

2014

2015

2014

(millions of Canadian dollars)

(12 weeks)

(12 weeks)

(24 weeks)

(24 weeks)

Adjusted operating income(i)

$

612

$

535

$

1,155

$

822

Adjusted net interest expense and other financing charges(i)

131

128

262

216

Adjusted earnings before taxes

$

481

$

407

$

893

$

606

Income taxes

$

121

$

(150)

$

197

$

(109)

Add (deduct) impact of the following:

Tax impact of items included in adjusted earnings before taxes(ii)

47

260

82

265

Provincial statutory corporate income tax rate change

(38)

—

(38)

—

Adjusted income taxes

$

130

$

110

$

241

$

156

Effective tax rate

39.4%

24.8%

37.2%

24.5%

Adjusted income tax rate

27.0%

27.0%

27.0%

25.7%

(i)

See reconciliations of adjusted operating income and adjusted net
interest expense and other financing charges above.

(ii)

See the EBITDA, adjusted EBITDA and adjusted operating income table and
the adjusted net interest expense and other financing charges table
above for a complete list of items included in adjusted earnings before
taxes.

Adjusted income tax rate is calculated as adjusted income taxes divided
by the sum of adjusted operating income less adjusted net interest
expense and other financing charges.

Provincial statutory corporate income tax rate change In the second quarter of 2015, the government of Alberta announced an
increase in the provincial corporate income tax rate from 10% to 12%.
The increase is effective July 1, 2015, but was enacted on June 19,
2015. As a result, the Company recorded a charge of $38 million related
to the re-measurement of its deferred tax liabilities.

Adjusted Net Earnings and Adjusted Basic Net Earnings Per Common Share The Company believes adjusted net earnings and adjusted basic net
earnings per common share are useful in assessing the Company's
underlying operating performance and in making decisions regarding the
ongoing operations of its business.

The following table reconciles adjusted net earnings and adjusted basic
net earnings per common share to GAAP net earnings and basic net
earnings per common share reported for the periods ended June 20, 2015
and June 14, 2014:

2015

2014

2015

2014

(12 weeks)

(12 weeks)

(24 weeks)

(24 weeks)

(millions of Canadian dollars/Canadian dollars)

Net EarningsAvailable toCommonShareholdersof theCompany

Basic NetEarnings PerCommon Share

Net Earnings
(Loss)
Available to
Common
Shareholders
of the
Company

Basic Net
Earnings (Loss)
Per Common
Share

Net EarningsAvailable toCommonShareholdersof theCompany

Basic NetEarnings PerCommon Share

Net Earnings
(Loss)
Available to
Common
Shareholders
of the
Company

Basic Net
Earnings (Loss)
Per Common
Share

$

185

$

0.45

$

(456)

$

(1.13)

$

331

$

0.80

$

(336)

$

(0.98)

Add (deduct) impact of the following:

Amortization of intangible assets acquired with
Shoppers Drug Mart

91

0.23

92

0.23

182

0.45

92

0.27

Restructuring and other related costs

47

0.11

—

—

56

0.14

—

—

Provincial statutory corporate income tax rate
change

38

0.09

—

—

38

0.09

—

—

Fair value adjustment on Trust Unit Liability(i)

(33)

(0.08)

8

0.02

25

0.06

20

0.06

Accelerated amortization of deferred financing
costs

6

0.01

10

0.02

8

0.02

10

0.03

Charge related to apparel inventory

6

0.01

—

—

6

0.01

—

—

Net fixed asset and other related impairments

3

0.01

2

—

5

0.01

4

0.01

Fair value adjustment on fuel and foreign
currency contracts

7

0.02

—

—

(2)

—

—

—

Shoppers Drug Mart acquisition-related costs
and divestitures loss

—

—

45

0.11

2

—

64

0.19

Recognition of fair value increment on inventory sold

—

—

457

1.14

—

—

457

1.33

Charge related to inventory measurement and
other conversion differences

—

—

139

0.35

—

—

139

0.41

Adjusted

$

350

$

0.85

$

297

$

0.74

$

651

$

1.58

$

450

$

1.32

(i)

Gains or losses related to the fair value adjustment on Trust Unit
Liability are not subject to tax.

Adjusted Debt The following table reconciles adjusted debt, used in the adjusted debt
to rolling year adjusted EBITDA ratio, to GAAP measures reported as at
the periods indicated. The Company believes that adjusted debt is
relevant in assessing the amount of financial leverage employed. In the
table below, the Company has also presented adjusted debt as at March
28, 2014, the date of the acquisition of Shoppers Drug Mart, as this is
the baseline for the Company's debt reduction targets.

As at

As at

As at

As at

(millions of Canadian dollars)

June 20, 2015

June 14, 2014

January 3, 2015

March 28, 2014

Bank indebtedness

$

275

$

335

$

162

$

295

Short term debt

505

605

605

605

Long term debt due within one year

1,009

74

420

902

Long term debt

10,053

11,797

11,042

11,262

Trust Unit Liability

756

715

722

703

Capital securities

225

224

225

224

Certain other liabilities

28

34

28

39

Total debt

$

12,851

$

13,784

$

13,204

$

14,030

Less:

Independent Securitization Trusts

$

1,255

$

1,355

$

1,355

$

1,355

Independent Funding Trusts

504

476

498

469

Trust Unit Liability

756

715

722

703

Guaranteed Investment Certificates

621

528

634

443

Adjusted debt

$

9,715

$

10,710

$

9,995

$

11,060

Adjusted debt to rolling year adjusted EBITDA is calculated as adjusted
debt divided by cumulative adjusted EBITDA for the latest four
quarters.

Choice Properties' Adjusted Funds from Operations(4)The following table reconciles Choice Properties' adjusted funds from
operations to GAAP measures for the periods endedJune 20, 2015 and June 14, 2014. The Company believes adjusted funds
from operations is useful in measuring economic performance and is
indicative of Choice Properties' ability to pay distributions.

2015

2014

2015

2014

(millions of Canadian dollars)

(12 weeks)

(12 weeks)

(24 weeks)

(24 weeks)

Net income (loss)

$

189

$

(2)

$

(22)

$

(10)

Fair value adjustment on Class B Limited Partnership units

(160)

(11)

94

37

Fair value adjustment on investment properties

16

—

17

—

Distributions on Class B Limited Partnership units

50

47

100

93

Amortization of tenant improvement allowances

—

—

—

1

Internal expenses for leasing

1

—

1

—

Funds from Operations

$

96

$

34

$

190

$

121

Straight-line rental revenue

$

(9)

$

(8)

(18)

(17)

Amortization of finance charges

(1)

52

(1)

51

Unit-based compensation expense

1

1

1

1

Sustaining property and leasing capital expenditures, normalized(i)

(10)

(10)

(20)

(18)

Adjusted Funds from Operations

$

77

$

69

$

152

$

138

(i)

Seasonality impacts the timing of capital expenditures. The adjusted
funds from operations calculation has been adjusted for this
factor to make the quarters more comparable.

SELECTED FINANCIAL INFORMATION
The following includes selected unaudited quarterly financial
information, which is prepared by management in accordance with IFRS
and is based on the Company's 2015 Second Quarter Report to
Shareholders. This financial information does not contain all interim
period disclosures required by IFRS, and accordingly, should be read in
conjunction with the Company's 2014 Annual Report and 2015 Second
Quarter Report to Shareholders, which are available in the Investor
Centre section of the Company's website at loblaw.ca and on sedar.com.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

June 20, 2015

June 14, 2014(3)

June 20, 2015

June 14, 2014(3)

(millions of Canadian dollars except where otherwise indicated)

(12 weeks)

(12 weeks)

(24 weeks)

(24 weeks)

Revenue

$

10,535

$

10,307

$

20,583

$

17,599

Cost of Merchandise Inventories Sold

7,620

8,271

14,841

13,776

Selling, General and Administrative Expenses

2,502

2,492

4,915

4,003

Operating Income (Loss)

$

413

$

(456)

$

827

$

(180)

Net interest expense and other financing charges

106

150

298

265

Earnings (Loss) Before Income Taxes

$

307

$

(606)

$

529

$

(445)

Income taxes

121

(150)

197

(109)

Net Earnings (Loss)

$

186

$

(456)

$

332

$

(336)

Attributable to:

Shareholders of the Company

$

185

$

(456)

$

331

$

(336)

Non-Controlling Interests

1

—

1

—

Net Earnings (Loss)

$

186

$

(456)

$

332

$

(336)

Net Earnings (Loss) per Common Share ($)

Basic

$

0.45

$

(1.13)

$

0.80

$

(0.98)

Diluted

$

0.44

$

(1.13)

$

0.79

$

(0.98)

Weighted Average Common SharesOutstanding (millions)

Basic

412.0

403.0

412.0

342.2

Diluted

416.7

403.0

416.7

342.2

CONDENSED CONSOLIDATED BALANCE SHEETS

As at

As at

As at

(millions of Canadian dollars)

June 20, 2015

June 14, 2014(3)

January 3, 2015(3)

Assets

Current Assets

Cash and cash equivalents

$

1,285

$

1,179

$

999

Short term investments

52

47

21

Accounts receivable

1,191

1,021

1,209

Credit card receivables

2,647

2,561

2,630

Inventories

4,349

4,297

4,309

Income tax recoverable

31

24

—

Prepaid expenses and other assets

245

226

214

Assets held for sale

24

44

23

Total Current Assets

$

9,824

$

9,399

$

9,405

Fixed Assets

10,275

10,257

10,296

Investment Properties

177

148

185

Intangible Assets

9,403

9,953

9,675

Goodwill

3,327

3,310

3,318

Deferred Income Tax Assets

150

298

193

Security Deposits

7

97

7

Franchise Loans Receivable

384

380

399

Other Assets

317

249

281

Total Assets

$

33,864

$

34,091

$

33,759

Liabilities

Current Liabilities

Bank indebtedness

$

275

$

335

$

162

Trade payables and other liabilities

4,924

4,678

4,774

Provisions

72

55

84

Income taxes payable

—

—

34

Short term debt

505

605

605

Long term debt due within one year

1,009

74

420

Associate interest

184

170

193

Capital securities

225

—

225

Total Current Liabilities

$

7,194

$

5,917

$

6,497

Provisions

85

65

76

Long Term Debt

10,053

11,797

11,042

Trust Unit Liability

756

715

722

Deferred Income Tax Liabilities

1,863

2,007

1,853

Capital Securities

—

224

—

Other Liabilities

810

763

782

Total Liabilities

$

20,761

$

21,488

$

20,972

Equity

Preferred Share Capital

$

221

$

—

$

—

Common Share Capital

7,866

7,816

7,857

Retained Earnings

4,881

4,694

4,810

Contributed Surplus

114

92

104

Accumulated Other Comprehensive Income

12

1

8

Total Equity Attributable to Shareholders of the Company

$

13,094

$

12,603

$

12,779

Non-Controlling Interests

9

—

8

Total Equity

$

13,103

$

12,603

$

12,787

Total Liabilities and Equity

$

33,864

$

34,091

$

33,759

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

June 20, 2015

June 14, 2014(3)

June 20, 2015

June 14, 2014(3)

(millions of Canadian dollars)

(12 weeks)

(12 weeks)

(24 weeks)

(24 weeks)

Operating Activities

Net earnings (loss)

$

186

$

(456)

$

332

$

(336)

Income taxes

121

(150)

197

(109)

Net interest expense and other financing charges

106

150

298

265

Depreciation and amortization

369

384

739

579

Income taxes paid

(71)

(88)

(206)

(169)

Interest received

1

13

3

21

Change in credit card receivables

(169)

(162)

(17)

(23)

Change in non-cash working capital

321

395

19

(196)

Net fixed asset and other related impairments

20

2

23

5

(Gain) loss on disposal of assets

(1)

4

(2)

4

Recognition of fair value increment on inventory sold

—

622

—

622

Charge related to inventory measurement and other conversion differences

SEGMENT INFORMATION
The Company has three reportable operating segments with all material
operations carried out in Canada:

The Retail segment consists primarily of retail food and Associate-owned
drug stores, and also includes in-store pharmacies and other health and
beauty products, gas bars and apparel and other general merchandise.
This segment is comprised of several operating segments, which have
been aggregated primarily due to similarities in the nature of products
and services offered for sale in the retail operations and the customer
base;

The Choice Properties segment owns and leases income-producing
commercial properties. The Choice Properties segment information
presented below reflects the accounting policies of Choice Properties,
which may differ from those of the consolidated Company. Differences in
policies are eliminated in Consolidation and Eliminations.

The Company's chief operating decision maker evaluates segment
performance on the basis of adjusted EBITDA(2) and adjusted operating income(2), as reported to internal management, on a periodic basis.

Information for each reportable operating segment is included below:

June 20, 2015

June 14, 2014(3)

(12 weeks)

(12 weeks)

(millions of Canadian dollars)

Retail

FinancialServices(4)

ChoiceProperties(4)

ConsolidationandEliminations(i)

Total

Retail

Financial
Services(4)

Choice
Properties(4)

Consolidation
and
Eliminations(i)

Total

Revenue(ii)

$

10,318

$

199

$

183

$

(165)

$

10,535

$

10,097

$

192

$

170

$

(152)

$

10,307

EBITDA(iii)

$

739

$

38

$

115

$

(110)

$

782

$

(117)

$

40

$

122

$

(117)

$

(72)

Adjusting Items(iii)

75

—

—

—

75

866

—

—

—

866

Adjusted EBITDA(iii)

$

814

$

38

$

115

$

(110)

$

857

$

749

$

40

$

122

$

(117)

$

794

Depreciation and Amortization(iv)

240

2

—

3

245

254

2

—

3

259

Adjusted Operating Income(iii)

$

574

$

36

$

115

$

(113)

$

612

$

495

$

38

$

122

$

(120)

$

535

Net interest expense and other
financing charges

$

91

$

14

$

(75)

$

76

$

106

$

97

$

12

$

124

$

(83)

$

150

(i)

Consolidation and Eliminations includes the following items:

Revenue includes the elimination of $124 million (2014 - $117 million)
of rental revenue and $41 million (2014 - $35 million) of cost recovery
recognized by Choice Properties, generated from the Retail segment.

Operating income includes the elimination of the $124 million (2014 -
$117 million) impact of rental revenue described above; the elimination
of a $16 million loss (2014 - nil) recognized by Choice Properties
related to the fair value adjustments on investment properties, which
are classified as Fixed Assets or Investment Properties by the Company
and measured at cost; the recognition of $3 million (2014 - $3 million)
of depreciation expense for certain investment properties recorded by
Choice Properties and measured at fair value; and the elimination of $2
million (2014 - nil) intercompany charges.

Net interest expense and other financing charges includes the
elimination of $62 million (2014 - $105 million) of interest expense
included in Choice Properties related to debt owing to the Company and
a $160 million fair value gain (2014 - gain of $11 million) recognized
by Choice Properties on Class B Limited Partnership units held by the
Company. Net interest and other financing charges also includes Unit
distributions to external unitholders of $11 million (2014 - $11
million), which excludes distributions paid to the Company, a $33
million fair value gain (2014 - loss of $8 million) on the Company's
Trust Unit Liability and, in 2014, the elimination of $8 million of
Choice Properties interest expense incurred to June 30, 2014.

(ii)

Included in Financial Services revenue is $89 million (2014 - $86
million) of interest income.

(iii)

Certain items are excluded from operating income and EBITDA(2) to derive adjusted operating income(2) and adjusted EBITDA(2), respectively. Adjusted operating income(2) and adjusted EBITDA(2) are used internally by management when analyzing segment underlying
performance.

(iv)

Depreciation and amortization for the calculation of adjusted EBITDA(2) excludes $124 million (2014 - $125 million) of amortization of
intangible assets acquired with Shoppers Drug Mart.

June 20, 2015

June 14, 2014(3)

(24 weeks)

(24 weeks)

(millions of Canadian dollars)

Retail

FinancialServices(4)

ChoiceProperties(4)

ConsolidationandEliminations(i)

Total

Retail

Financial
Services(4)

Choice
Properties(4)

Consolidation
and
Eliminations(i)

Total

Revenue(ii)

$

20,148

$

398

$

365

$

(328)

$

20,583

$

17,192

$

372

$

337

$

(302)

$

17,599

EBITDA(iii)

$

1,473

$

83

$

242

$

(232)

$

1,566

$

313

$

78

$

240

$

(232)

$

399

Adjusting Items(iii)

80

—

—

—

80

876

—

1

—

877

Adjusted EBITDA(iii)

$

1,553

$

83

$

242

$

(232)

$

1,646

$

1,189

$

78

$

241

$

(232)

$

1,276

Depreciation and Amortization(iv)

480

5

—

6

491

444

4

—

6

454

Adjusted Operating Income(iii)

$

1,073

$

78

$

242

$

(238)

$

1,155

$

745

$

74

$

241

$

(238)

$

822

Net interest expense and other
financing charges

$

177

$

28

$

264

$

(171)

$

298

$

167

$

25

$

250

$

(177)

$

265

(i)

Consolidation and Eliminations includes the following items:

Revenue includes the elimination of $247 million (2014 - $232 million)
of rental revenue and $81 million (2014 - $70 million) of cost recovery
recognized by Choice Properties, generated from the Retail segment.

Operating income includes the elimination of the $247 million (2014 -
$232 million) impact of rental revenue described above; the elimination
of a $17 million loss (2014 - nil) recognized by Choice Properties
related to the fair value adjustments on investment properties, which
are classified as Fixed Assets or Investment Properties by the Company
and measured at cost; the recognition of $6 million (2014 - $6 million)
of depreciation expense for certain investment properties recorded by
Choice Properties and measured at fair value; and the elimination of $2
million (2014 - nil) intercompany charges.

Net interest expense and other financing charges includes the
elimination of $124 million (2014 - $174 million) of interest expense
included in Choice Properties related to debt owing to the Company and
a $94 million fair value loss (2014 - loss of $37 million) recognized
by Choice Properties on Class B Limited Partnership units held by the
Company. Net interest and other financing charges also includes Unit
distributions to external unitholders of $22 million (2014 - $22
million), which excludes distributions paid to the Company, a $25
million fair value loss (2014 - loss of $20 million) on the Company's
Trust Unit Liability and, in 2014, the elimination of $8 million of
Choice Properties interest expense incurred to June 30, 2014.

(ii)

Included in Financial Services revenue is $181 million (2014 - $175
million) of interest income.

(iii)

Certain items are excluded from operating income and EBITDA(2) to derive adjusted operating income(2) and adjusted EBITDA(2), respectively. Adjusted operating income(2) and adjusted EBITDA(2) are used internally by management when analyzing segment underlying
performance.

(iv)

Depreciation and amortization for the calculation of adjusted EBITDA(2) excludes $248 million (2014 - $125 million) of amortization of
intangible assets acquired with Shoppers Drug Mart.

CORPORATE PROFILE

2014 Annual Report and 2015 Second Quarter Report to Shareholders

The Company's 2014 Annual Report and 2015 Second Quarter Report to
Shareholders are available in the Investor Centre section of the
Company's website at loblaw.ca and sedar.com.

Additional financial information has been filed electronically with
various securities regulators in Canada through the System for
Electronic Document Analysis and Retrieval (SEDAR) and with the Office
of the Superintendent of Financial Institutions (OSFI) as the primary
regulator for the Company's subsidiary, President's Choice Bank. The
Company holds an analyst call shortly following the release of its
quarterly results. These calls are archived in the Investor Centre
section of the Company's website at loblaw.ca.

Conference Call and Webcast

Loblaw Companies Limited will host a conference call as well as an audio
webcast on July 23, 2015 at 11:00 a.m. (ET).

To access via tele-conference please dial (416) 260-0113. The playback
will be made available two hours after the event at (647) 436-0148,
access code: 2383515. To access via audio webcast, please visit loblaw.ca, go to Investor Centre and click on webcast. Pre-registration will be
available.

Full details about the conference call and webcast are available on the
Loblaw Companies Limited website at loblaw.ca.

News Release Endnotes

(1)

This News Release contains forward-looking information. See
"Forward-Looking Statements" section of this News Release for a
discussion of material factors that could cause actual results to
differ materially from the forecasts and projections herein and of the
material factors and assumptions that were used when making these
statements. This News Release should be read in conjunction with Loblaw
Companies Limited's filings with securities regulators made from time
to time, all of which can be found at sedar.com and at loblaw.ca.

(2)

See "Non-GAAP Financial Measures" section of this News Release.

(3)

Certain 2014 figures have been restated to conform with the current
year's presentation. See "Non-GAAP Financial Measures" section of this
News Release and Note 2 "Significant Accounting Policies" and Note 4
"Acquisition of Shoppers Drug Mart Corporation" in the Company's 2015
Second Quarter Report to Shareholders.

(4)

The results for the Financial Services and Choice Properties segments
are for the periods ended June 30, 2015 and June 30, 2014, consistent
with the segments' fiscal calendars. Adjustments to align Financial
Services' and Choice Properties' results to June 20, 2015 and June 14,
2014 are included in Consolidation and Eliminations. See the "Non-GAAP
Financial Measures" and the "Segment Information" sections of this News
Release.